BMW profits drop as it invests in staff and technology

BMW, the German luxury car maker, reported a 25pc fall in second quarter
profits on higher staff costs and investments in new technology and said a
worsening of the eurozone debt crisis or a slowdown in China could hurt its
business.

BMW has invested in electric cars and carbon fibre technology and increased its workforce by 5pc to 102,000.

BMW said "higher personnel costs, increased expenditure on development and new technologies, intense market competition and the higher baseline of the previous year's record second-quarter earnings all contributed to the lower earnings figures in 2012."

Vehicles sales rose 5.4pc to a record 475,000 and profit margins of car sales remained at 11.6pc, the same as in the first quarter though slightly down from a year ago.

Max Warburton, analysts at Sanford C Bernstein in London, wrote that "BMW's numbers are still good but they are not great, unlike second quarter 2011".

The motor manufacturer continued to face headwinds from the eurozone debt crisis, with sales in Europe dipping 0.1pc to 437,338 units.

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Sales volume in North America rose 10.3pc to 177,423 units and in Asia rose 25.6pc to 238,731 units, with a 30pc increase in China.

"The BMW Group continued to perform extremely well," said Norbert Reithofer, the chief executive.

The company, which has invested in electric cars and the use of high-tech carbon fiber to save weight, said it had increased technology and development costs and cited investments in its production network.

Staff costs were boosted by a 5pc increase in the workforce to 102,000. The company said it was still recruiting engineers and skilled workers.